The question about efficiency of the capital market always comes up in my mind. And now I am asking how fast information released by stakeholders of the market affects or reflect on prices on the exchange.
Shareholders make investment decisions based on the information they get from stakeholders of the market. Such information include new tax measures announced by the government, announcement of new products by the company, release of annual reports and announcement of higher or lower dividends. In the advanced markets, for instance on Wall Street, information released by companies or the government rapidly reflects on the prices of shares within minutes. Information release at non-trading hours affects the market in the next trading session.
In the Ghanaian market on the other hand, one can hardly tell the relationship between information and their effect on the prices in the market. Moreover, the speed of reflection on the market varies from time to time.In the immediate past, CAL Bank share price saw a decrease when there was a problem in the company with respect to share transfer between two parties. How direct and certain can one be to link the cause of decrease in share price to that particular information? Other stocks in the market have shown similar trend. By my observations in the earnings season, share prices respond to the performance of companies as reported by their financial. Even at this time, the speed of reflection is an issue to be concerned about.
I can’t wait for the capital market to reach the point where information takes minutes to reflect on the market. This would make the market active and inform investors in making good decisions moreover, aiding accurate speculations.
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Does it have anything to do with technology? Or is it that the GSE is not so speculative?
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Technology can also play a role in this, but it could also be that, investors don't see the relation between information (like news items) and their effect on the stocks they hold. Most investors get the news or information (which has the potentials to affect the company) but make no investment decision, others move with the crowd (which mostly reacts late). I think our investment climate is still young and lacking 'investors'. Thus “GSE is not so speculative” *borrowing your words*.
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